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On the surface, the Twitter IPO was a success. The company filed their IPO with an original range of $17-$20 per share. It raised the offering to $23 to $25, and then priced the initial public offering at $26. Despite next-day headlines that Twitter appreciated 73%, the real story is that most investors have lost money buying Twitter stock.

(Disclosure: I do not own shares in Twitter.)

Twitter sold 70 Million shares on the IPO at $26. But the opening trade for Twitter had the company’s shares changing hands initially at $45.10. Those investors who were allocated shares on the IPO made a quick 73.5%. The stock immediately traded up to $50.09. Those who sold IPO shares made 92.7%, and those who bought on the first trade and flipped it made 11%. But, most investors who bought Twitter stock after the initial trade lost money. The stock traded down to $44, and closed at $44.90 with over 117 Million shares trading. Most shares were bought into a downward slide. And one only day since its debut, the stock has traded above its opening trade. On November 15, it opened at $45.25 and briefly traded above the opening trade before closing down again at $43.38. Today, Twitter trades at $40.55.

The lesson: Most investors lost money on the Twitter IPO that appreciated 73% on its first day, as counterintuitive as that sounds.

First, the media is doing investors a disservice by reporting IPOs, like Twitter, in glowing terms. Unless investors are allocated stock at the IPO price, investing in IPOs can be a losing proposition. The real story isn’t that Twitter popped from its IPO price, where few investors were able to buy the stock, but that it is trading lower than where it opened for trading. Check out For Most Investors, Twitter's IPO Price Doesn't Matter.

Second, with a large discrepancy between IPO price and opening trade, the underwriters are those allocated IPO stock a big incentive to flip the stock. Retail investors are strongly discouraged from selling IPO stock, and are usually “asked” to hold the stock for six months. It is tough to hold institutional investors to such requests. And, of course, there have to be some sellers in the after market in order to provide liquidity for the stock. But an IPO that is well priced and opens at an appropriate price would trade up upon debut because there would be demand for the stock at that price. In this case, supply is exceeding demand.

Third, with such first-day (and subsequent) trading behavior, investors are rightfully prudent and cautious about jumping into the stock. There doesn’t appear to be a catalyst on the horizon and all the excitement about the stock was blown out on the first trade.

Trading volume is beginning to temper and that is a good sign. Interest in short selling rose and has settled in to a high, but not extremely high, level. Analysts’ recommendations with price targets have been established, but are confusing.

Currently, four of seven of the price targets on Twitter are below where it is currently trading. Of the ten ratings on Twitter, four analysts rate it a Buy or Overweight, five rate it Neutral, and one rates it a Sell. Interestingly, two of the Buys have price targets below where it is trading, and two of the Neutrals have the second and third highest price target. (Source: Briefing.com)

What should investors do about Twitter now? Evaluate it with the same scrutiny as a seasoned stock. And that means letting it season.